For readers who have tired of Rick’s Picks’ sugar-coated predictions for the economy, here’s a despairing jeremiad from that irrepressible bear’s bear, Erich Simon. Is there any escaping the grim future that he foresees? Only on the planet Mars, perhaps (but even there, the dust can kill you). Here’s Erich, with a take on the endgame that some readers may find all too plausible:
When you look at the political leadership in the U.S., it is in complete dis-harmony. In-fighting, finger pointing, fragmentation, bickering, squabbling, separation, individualism, heterogeneity, split, divided, dog-eat-dog, every-man-for-himself — all the hallmarks of a people in breakdown caught inside the walls of a collapsing and imploding economic environment, fueled by resource depletion and gross mismanagement. That’s mismanagement to the point of indictment: of the nature of Man, and of the determinism of Nature.
We are witness to demographic saturation, without unification or leadership, on a global scale. The world economy is adjusting (or not) to a blow-off top marked by an age of corruption and squandering. It is the final hurrah, catalyzed by Western capitalist blow-off finance, spearheaded by the U.S. Fed, on an epic and terminal scale. Society itself is disintegrating as the pool of participants that make up the active, economically productive base continues to shrink below sustainable levels until the time of breakdown. Unable to absorb any more conflict, negative-impact events of all kinds are only hastening the demise.
“Too Poor to Live”
“Squandering” here means misallocating and misappropriating money into the pockets of the few and away from meaningful investment in the common good. For example, there is the building of McMansions in place of more modest shelter when basic necessities such as health care go unaddressed. The state of health care in the United States, the supposed richest nation, describes a country literally too poor to live.
In leading-edge states like California — irretrievably bankrupt — we spend far more on prisons than on schools, more on locking people up than on teaching them. This statistic is daunting, if not to say incredible, and points in only one direction: not toward unity, but toward disintegration. The path to national (and globally intertwined) ruin is now undeniable. The present administration — the Wall Street/Obama amalgam — with its two-faced attempt at sugar-coating a yellow-brick overlay, is an affront to our remaining vestige of national pride and decency.
The Great Pawn
We are living in the endgame, the time of The Great Pawn. The Fed bankers understand this only too well. They know that it is not a matter of ‘if’ but of ‘when’ before chaos breaks apart whatever fleeting social cohesion is yet endures. The banking authority continues to stall and stop-gap until the day when there is simply nothing left to sell, nothing left to pawn. Competition for ‘money’ will destroy all things money — equities, bonds, gold. The global throngs will sell whatever they own to whomever they can to be able to achieve what was yesterday’s ambition and tomorrow’s subsistence.
This is the story of Planet Chindia. This is no Cinderella story, welcoming the Third World into the ranks of materialism and luxury that demands no toil. The auto market collapse over the last decade brought not just the implosion of an industry, but the curtailment of travel itself. Mobility, a fundamental inalienable right, has been removed for the larger contingent, curtailed for most everybody else — a new dawn where horizons shrink, borders are carved, and citizens boxed.
Liquidity-to-Liquidation
As prices for things that enhance the global lifestyle continue to rise, investors will at first feel the need to chase ever-higher returns. Eventually, however, the day will come when liquidity will give way to liquidation. That is where we are today: caught in a chaotic flux of asset rotations that has rendered the concept of ‘buy and hold’ a quaint relic of the past. The severe drawdown of household nest eggs, tied to the ongoing collapse of real estate, is a harbinger of the coming sale of everything both tangible and, especially, intangible.
Greenspan blew out the money supply, triggering a global Pac-Man game by mergers-and-acquisitions wizards. When the bottom dropped out, crushing the so-called Greenspan put, equities collapsed in 2008-09. Helicopter Ben to the rescue? Not hardly. His attempt at a bank bailout has filled the banks with reserves that no one wishes to borrow. And the more he enriches the connected few, the faster he bankrupts the greater good. Hanging onto the reins of a stagecoach bound for a cliff, Bernanke is looking for his moment to jump.
(If you’d like to have Rick’s Picks commentary delivered free each day to your e-mail box, click here.)
{ 15 comments }
Author’s view point is fully respected.
In every mad situation precipitated by few administrators, good things happen albeit unintentionally.
One of the formidable and irreversible change that has occurred in 20 th Century and continues in 21 st century is to make majority of people to think, learn how to conduct their lives with whatever means they can grab. Liquidity “wherever from” has led to flow of money also in the hands of this silent majority and helping them reap silent benefits by servicing the “few”. There has been unprecedented flow of information and education opportunity bringing diverse humanity of this planet much closer.
Artifical monetary built up may collapse but I am sure of ingenuity of masses and their capacity to overcome all odds. In ultimate analysis this silent majority will fight from brink armed with new found intellectual abilities and survival instincts.
Situation is grim but give some credit to human race for their ability to overcome.
“[Benny Boy's] attempt at a bank bailout has filled the banks with reserves that no one wishes to borrow.”
I wondered if this wasn’t a typo, as we’ve also a problem with lending. But it works either way, it turns out. Prospects too grim to borrow, prospects too grim to lend.
Dead and locked, the system is.
Anyway, about the McMansions… I was thinking the other day about the plaster walls in my home. I remember the last time I had the house appraised, about six years ago, and the guy being really impressed by the fact that I had plaster walls (ceilings, too). So I was thinking the other day… I’ve never been in a newly built house, though people say they’re made of crappy material. I guess they wouldn’t last very long, maybe not even to the point where someone actually manages to own the damn thing.
Build a peice of crap, use cheap material, pocket the probably meger profit from buildig-to-not-last, then, if there was going to be a future to speak of, tear down and rebuild. What a wonderful idea this service-based economy is/was!
But again, I can’t say for certain. It’s just my sneaking, gnawing suspicion that the debt will outlive the house, and so it won’t be rebuilt after it crumbles. The land itself will probably become too expensive to touch. Speaking of which, I came across this little story…
http://www.mlive.com/news/flint/index.ssf/2009/03/city_of_flint_shutdown_offthec.html
I guess the built-to-last, modest homes won’t be either. Having lived in the Gary, IN area all my life, though, it’s nothing new to me. Hell, it’s gotten to the point where I can swear that parts of it are not just ghost town, but a burial ground, full of restless and angry spirits, the occaisonal weeded-over collapsing pile of wood and brick… made all the more surreal that someone still lives in one of the houses in the not-a-neighborhood-anymore.
And only now do many Tea Party. Ha… if this kind of destruction brings only angry voices lead by Palin, then I’d hate to see what it takes to bring outright revolution. Better late than never, though, I guess.
Almost forgot to comment on the education/prison point…
I don’t know that I can agree that we spend little on education, but a lot on merely locking people up. For years money has been thrown at the public education system, with no results. Then there’s the insanity of one being able to get a degree from behind bars.
But given the bizare-ness of it all, I guess the two about add up to being the same thing.
A partial answer to this trend is to stop the flood of borrowed capital to well placed people and bankers who never proved they could manage other people’s money and capital we investors entrusted to them. They lose it and the Feds bail them out and cover their unfunded pensions and unemployment costs.
In other cases, companies go bankrupt and the key executives take their golden parachutes and go elsewhere to work their “magic”. (This is also known as birdcage management – shake up the cage and they all land on different perches with no net job loss.) Let these corporations employ more of their own retained earnings and see how the roulette will quickly wheel stop.
We in small business have to put our homes up as collateral to get the necessary working capital to fund our companies.
If we have a great idea, the banks and the SBA want to see revenues. If we need to raise investment capital, the SEC says that we can only go to limited number qualified investors (millionaires) or VCs with exit plans, but there is nobody “protecting” non-millionaires who ‘plunk down’ $50k+ on a Hummer or Mercedes that will depreciate and end up in a junk heap in 10 years.
Small business …
represents 99.7% of all US companies
employs 50% of all private sector workers
creates over 75% of all net new jobs
produces 50% of the non-farm private GDP
earns 13 times more patents per employee
accounts for 29% of all export value
The predictions in this editorial do not all have to come to pass. Yet, if apathy continues to reign, many who currently are well off may not be and the investment climate as well as our freedoms will degrade further.
Rick – please contact me if you want to help put America back on the track. I’ve been working on a project – national in scope – that can help small and medium sized businesses rejuvenate the economy from the ground up.
“Goodsport”
We’ve nearly “ate our cake!” Next up, the rolling of the heads!
Most likely true for the United States and Western economies.
China is probably in a world of their own at this point. Their economy has reached critical mass and is self-sustaining now, thanks to our gift of a manufacturing base courtesy of treason by our “leaders”. Not only did we give away our manufacturing base, then we invent “free trade” so we nurtured it for them with our own money. This will go down in history as the greatest strategic conquest of all time. They win without firing a shot or losing one soldier. It is finally dawning on Joe Sixpack that he is living in the ruins of a conquered nation.
Let’s all just start killing each other now. Last one standing wins….
Holly Cow!
I thought I was bearish.
I agree with most of what he has to say.
I believe the political corruption will only be solved with a return to the constitution. I do not see much movement there yet. The infighting is simply a sign that there is little money to steal from taxpayers. A The monetizing of the debt by the Fed is a last gasp at a money grab by special interests. clear sign we are nearing the end.
I am snot sure what Erich has in mind about healthcare.
My ideas embrace, a free market in health care.
1) More competition for insurance. Enable out of state insurance companies to compete where ever they want. The state government restrictions result in local monopolies.
2) All doctors and hospitals should have to publish their prices. This way people can shop for services. Healthcare providers should have to charge the same to everyone. Hospital often charge 2-5 times more to people without insurance. Charging the same enables people to make an economic calculation between buying insurance and not.
3) Make healthcare insurance and fees paid by individuals tax deductible, like it is for corporations.
4) Make Medicare taxes deductible. They young are paying for the old. Give them a break.
Using the government to rob one group of people to pay for the healthcare of another politically connected group has clearly failed. NObody in this country remembers the healthcare system before Medicare and Medicaid and HMO’s. All constructs of government. Back then, health care was good, cheap and compassionate. Something to think about.
Silver is at some very interesting support around $15.50-$16. Is this the big sign in the way metals will move?
What did this author really say? Where’s the beef? Sensationalist journalism backed by practically nothing presented to support his points. Not that I don’t agree with much of what he says, but long on opinion, short on substance.
go to http://www.reformation.org The Non Energy Crisis by Lindsey Williams how the one world goverment takes over the world just like they are doing now own everything,,,,,,,,,every one works for them
The awful truth that so many of us dread is that there is simply no place to hide and no adequate strategy that can do justice for the apocolypse of the total financial meltdown that is inevitable.
You need to re-print an article by Roger Wiegand — now he’s a “real doom and gloomer”. He at least gets into specific’s as to what will happen and timing. He can strike fear into the most “hard-hearted” person. He is headquartered in Michigan so should know first hand what conditions are there.
Nice prose. While I understand the author’s compelling feelings of doom, it is very rare for such extremes (including Goldilocks) to materialize much less persist.
{yawn}…
Wake me when I can start spending my day out in my garden instead of driving into the office….
BTW- I agree with everything Mark says above about healthcare. Reforming healthcare would be egregiously easy- just remove the policy, and let the free market weed out the corruption and inefficiency- It’s that “remove the policy” part that guarantees it will never fly in Washington.
Comments on this entry are closed.